Reality Stars Suffer the Consequences of Owing Back Taxes
Reality Stars Suffer Consequences of Back Taxes
Reality Stars Suffer the Consequences of Back Taxes – The recent indictments of reality television stars Mike Sorrentino and Teresa and Joe Giudice highlight the importance of staying current with the IRS. All three, together with Mike’s brother Marc Sorrentino, were charged multiple offenses that included failing to file federal tax returns, misreporting income and underpaying income taxes. While these individuals operated under the radar for years, their attempts to avoid paying income taxes eventually caught up with them. They now face serious consequences that seem much more painful that paying the back tax balances they originally owed.
Jersey Shore star Mike Sorrentino and his older brother Marc, who was acting as his financial manager, were recently indicted for failing to pay a back tax balance on income of over nine million dollars earned over the last five years. Although both Mike and Marc claim that their accountant is to blame for their tax troubles, they have not been able to convince the tax collection authorities that this is the case. Among other things, the brothers have been charged with 1) grossly underreporting millions of dollars of income earned from promotional television appearances, 2) funneling business proceeds into personal bank accounts, 3) claiming various personal items such as expensive clothes and cars as business expenses and 4) failing to report cash payments made to various booking agencies. If convicted, the Sorrentino brothers could face multiple years in prison for evading the payment of taxes on income earned during the time period under scrutiny.
Occurring almost concurrently with the indictments of the Sorrentino brothers, Teresa and Joe Giudice, stars of another reality show, the Real Housewives of New Jersey, were convicted of similar charges of tax evasion together with charges of mail fraud, wire fraud and bankruptcy fraud. The couple plead guilty to submitting fake W-2 forms to obtain mortgages, using the phone to bilk cash from banks and falsely reporting income and assets in bankruptcy proceedings. In addition, Joe was convicted of failing to file federal income tax returns over a period of four years resulting in a back tax balance on income of nearly a million dollars. The couple recently negotiated a plea deal and will begin serving consecutive prison sentences.
The cases of both the Sorrentinos and the Guidices illustrate the negative consequences of ignoring tax deadlines and failing to pay back tax balances. The Internal Revenue Service is a very powerful collections agency and will resort to forceful collection activity if income taxes are not paid in a timely manner. When faced with a back tax balance, the worst choice a taxpayer can make is to ignore the problem and hope that it will go away. In light of increasingly sophisticated collection techniques, the possibility of this happening is very unlikely. The IRS will begin by assessing penalties and interest and will follow this by more aggressive techniques including tax liens, tax levies and wage garnishments. If none of these actions result in payment of the back tax balance, the taxpayer may face criminal prosecution for willfully evading the payment of income taxes.
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